Wednesday, October 19, 2016

Economy: China Is Getting Stronger Again

(Drivebycuriosity) - If we believe the media, China is in a deep mess, but the reality is much brighter. This morning we learned that China`s retail sales grew 10.7% in September, faster than in August (plus 10.6% china). The charts below suggest that the Chinese economy has stabilized and confirm the solid BNP growth numbers (plus 6.7% in Q3  bbc). Faster growing retail sales are a sign that China´s consumer spending, the motor of the domestic economy, has bottomed out.

 I am not surprised. The huge country is still in the begin of a secular catching-up process which is fueled by extreme income & wealth differences to the US and other Western nation values. Today China has about $7,500 income per capita, the US number is  $54,600 (worldbank). And: China is transforming into a modern economy, helped by the technological progress. People are flooding into the big cites. The rapid urbanization creates millions of jobs and is driving income growth for the whole nation. Swift rising incomes are fueling the economic growth of China. This economic environment makes a China crash highly unlikely.

This is good news for the global economy: China is the world's second-largest economy and the second-biggest importer of both goods and commercial services. It looks like that China´s consumer could save the world.

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